Turkey’s economy grew 5 per cent in the fourth quarter and expanded 0.6 per cent in the year as a whole, just above the government forecast, a Reuters poll showed as the country shook off the recessionary impact of a 2018 currency crisis.

The major emerging market economy contracted 2.3 per cent in the first quarter and 1.6 per cent in the second quarter, before growing a modest 0.9 per cent year-on-year in the third quarter. In a poll of 16 economists, the median forecast was for 5.0 per cent year-on-year growth in the fourth quarter.

Haluk Burumcekci, of Burumcekci Consulting, told Reuters that while a decline in foreign demand had hit growth, consumption and retail sales were strong.

“With the contribution of delayed domestic demand coming into play due to the fall in loan interest rates, we are seeing a large growth in the fourth quarter,” he said.

Turkish economic growth has averaged around 5 per cent over the last two decades. But the 2018 crisis cut the Turkish lira’s value by nearly 30 per cent, sent inflation soaring and severely crimped imports. The central bank responded to the crisis by raising its policy rate to 24 per cent, where it had stayed until last July. It has cut rates by 1,325 basis points since then in order to boost growth.

Full-year growth was seen at 0.6 per cent, just above the government’s forecast of 0.5 per cent announced in September. Previously it had forecast 2019 growth of 2.3 per cent.

Economist forecasts for fourth quarter growth ranged between 4.0 per cent and 6.1 per cent, full-year growth forecasts range between 0.4 per cent and 1 per cent. Turkish industrial production climbed 8.6 per cent year-on-year in December, rising for a fourth straight month, further signalling a sharp economic pickup in the last quarter of 2019.

Reuters